Have you ever considered what happens after someone is awarded alimony in a divorce agreement? Many people may think that the alimony is paid indefinitely, but that only happens in certain situations. Most cases will see a temporary amount of alimony paid to one of the spouses in a divorce. But beyond the time period and alimony amount, what else do spouses who have an alimony arrangement have to deal with?
One of the most important issues in this regard is tracking the payments themselves with meticulous records and details about the payments. The reason for this is two-fold: alimony has tax implications and it can also spawn future litigation or be involved in future litigation.
Alimony has a massive impact on an individual’s taxes. If they are the paying spouse, then they can use their payments towards an deduction on their taxes. If they are the receiving spouse, then they must include the alimony as part of their taxable income. As you can imagine these are details you don’t want to get wrong. As such, tracking alimony information is important.
So what should you track? Every time there is a payment, you should take note of the date of the payment, the addresses used from the payment (sent from and sent to), the check number, the bank used for the transaction, the account number used, and any other identifying information on the check. If a check wasn’t used, then be sure to create a paper receipt that both you and your former spouse sign to signify the completion of the alimony transaction.